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Cellphone Import Ban Upheld, But Workarounds In The Works

The Bush administration upheld an International Trade Commission (ITC) ban on importing CDMA 1x EV-DO and W-CDMA cellular phones and modems whose Qualcomm-made chips were found to violate Broadcom patents. At least some of the banned phones, however, might still make it to market through select carriers.

The ITC imposed the ban on June 7 on phones with Qualcomm-made cellular baseband chips that infringe multiple Broadcom power-conservation patents. To reduce the ban's impact on consumers and the industry, the ITC added a grandfather clause allowing suppliers and carriers to continue importing CDMA 1x EV-DO and W-CDMA devices that had already been commercially available in the United States before June 7.

Since the ruling, carriers and Qualcomm have developed several strategies to bring at least some of the offending phones to market. Verizon Wireless, for example, secured its own licensing agreement with Broadcom, as did a second carrier that Broadcom declined to name. In addition, Sprint Nextel said it will use phones incorporating alternative technology that Qualcomm developed in the hopes of avoiding the ban.

Sprint Nextel will also join Qualcomm in asking a U.S. Court of Appeals to stay the ban while it hears an appeal. Qualcomm CEO Paul Jacobs said his company will pursue "all legal and technical options available" to fight the ban.

The majority of EV-DO and W-CDMA phone models available in the United States as of June 7 contain the offending chipsets, carriers AT&T and Verizon have said. For W-CDMA phones, AT&T also said, few options exist for chipsets other than Qualcomm-made chipsets.

Despite's the ban's grandfather clause, carriers and the CTIA trade association complained the ban would stifle innovation by preventing the launch of new services and handsets. CTIA also commissioned a study that concluded the ban would cause "direct economic harm" of $4.3 billion to $21.1 billion to U.S. consumers and to the cellular industry and "billions more in lost productivity."